Free Essay

Internet Bubble

In: Business and Management

Submitted By tyrell27
Words 589
Pages 3
The Internet Bubble (1998-1999)

The internet bubble that burst during the year of 1998-1999 was similar to the housing market affect we saw happen no more than four years ago. In the case of the housing market, you had large market firms offering different types of loans to individuals that really couldn’t afford them (Balloon rate loans, Adjustable rate loans just to name a few). The main objective of these larger companies (Freddie Mac, Fannie Mae included) were to gain a significant profit while the “getting was going good”. In other words, they wanted to cash in on the loans they were lending to people that they knew eventually they wouldn’t be able to afford the loan. Whether the customer could afford the loan or not, wasn’t the main concern of the few that were running this ridiculous scheme. Once they saw that overall situation was going to eventually fall back on the customers who trust them with the loans they were signing up for, the quickly slid out the back door and left the customers in a world of trouble. Regardless if their companies went down, a few of people at the top of the food chain actually got rich off of the downfall of the housing market. Again, this is similar to what happen to the internet bubble before it bust to pieces. There was some research that was done in 2003 that showed how there was a radical transformation in the profile of IPO investors (Entrepreneurs Exploiting the Internet Bubble 1998 to 2001: Do Insiders Abandon Ship at the First Sign of Trouble?). By the late 1990s, the peak of the internet altered the profile of the IPO investor. Individual investors latched on to this IPO market action. They couldn’t get enough of it due to the high revenues and profits that large companies didn’t have to work for. The IPO market action created a environment where companies floated successful IPOs with very marginal track records (Entrepreneurs Exploiting the Internet Bubble 1998 to 2001: Do Insiders Abandon Ship at the First Sign of Trouble?). One result in particular to this was the creation of large paper fortunes. A lot of investors, more than few with inside knowledge, actually cashed out with a great deal of wealth before the internet bubble actually burst. Researchers from Babson College conducted a research of thirty companies that went public during the years of 1998-2001. They broke the thirty companies down into three different groups; therefore, ten companies in each group. Their research showed that there was a direct relationship between the percentage of outstanding shares held by insiders at IPO and the annualized company return with respect to market capitalization (Entrepreneurs Exploiting the Internet Bubble 1998 to 2001: Do Insiders Abandon Ship at the First Sign of Trouble?). Their research also found that float falls as the annualized return goes up (Entrepreneurs Exploiting the Internet Bubble 1998 to 2001: Do Insiders Abandon Ship at the First Sign of Trouble?). The research showed that there was a positive relationship between company success and insider holdings. It doesn’t matter whether it is in the technology world or people to people interaction. There is always a moral line that has a high possibility of being breached at any given moment. Investors and companies have their own objectives sometimes. It seems that they never sit back to think about the damage that they can cause a person or a family of their thought of getting rich by any means necessary.…...

Similar Documents

Free Essay

Internet Bubble

...The Internet Bubble Fundamentals of E-Commerce Instructor: Scott Howell Student: Lisa Mercer May 27, 2012 Introduction Within the past decades of the internet first being established the lives of everyday Americans and the world have changed greatly. Businesses have changed and evolved greatly with the access to the internet, as many are able to purse dreams of starting a business and possibly making millions. The internet has opened the doors for many to communicate with each other, receive daily news, and to do shopping. The upcoming of possibilities through the internet also led to irrational decisions brought on by greed from investors that made way for the Dot Com Bubble. History of Internet A pioneer of the creation the internet was Tim Berners-Lee. Though the internet didn’t become wide spread until the early 1990s the making of the World Wide Web can be traced back into the 1980s. Berners-Lee tried to sell his creation to the company that he was working for in Switzerland, but they were slow to acknowledge his efforts.(Griffin, 2000) With that Berners-Lee turned to the internet community in 1991 making his World Wide Web browser and web server software available. (Griffin, 2000) Many enthusiasts began setting up their own web servers around the world. Many scientists were already using the internet to share information found it easier to post their information on the web and wait for a reply. With some government agencies having the......

Words: 1606 - Pages: 7

Free Essay

Internet Bubble

...Mini Research Paper: Internet Bubble Fundamentals of E-Commerce Professor: Russell Calhoun Precious Harper Table of Contents Introduction…………………………………………………………. 3 Brief Description of WWW and Internet …………………………… 4 Successful Dot.com companies……………………………………… 5 Unsuccessful Dot.com companies…………………………………… 6 Conclusion……………………………………………………………. 6 Work Cited…………………………………………………………… 7 British engineer Tim Berners-Lee developed the world-wide-web in 1989; the World Wide Web became available publically on August 6, 1991. The world-wide-web is a system of resources that allows people to view and interact with a variety of information. A computer that is connected to the Internet can access the world-wide-web. Many people believe the Internet and the World-Wide-Web are one in the same when in-fact they are not. The Internet is a massive network of networks; it connects personal computers, mainframes, cell phones, GPS units, music players etc. The Internet started in the 1960’s and it’s a massive hardware combination of millions of personal, business and government computers all connected like roads and highways. The world-wide-web (WWW) is a system of Internet servers that support specially formatted documents. The documents are formatted in a markup language called Hypertext Markup Language (HTML) which supports and links documents, graphics, video and audio files.......

Words: 1243 - Pages: 5

Premium Essay

Housing Bubble

...What is a “Housing Bubble”? Explain Subprime Lending and Why Many Believe That it is the Single Biggest Contributor to the Current Economic Malaise.7 December 2008 | | | | In this paper I will address the definition of a “housing bubble”, discuss subprime lending and why many believe that it is the single biggest contributor to the current economic state. A housing bubble, references real estate markets specifically. It is a type of economic bubble that occurs periodically in local or global real estate markets which is characterized by rapid increases in valuations of real property such as housing, until they reach unsustainable levels relative to income and other economic elements. These bubbles can occur in local and/or global markets. The recent US housing bubble, which peaked in early 2005, some of the major areas that were affected were California, Florida, the Northeast corridor and the Southwest markets. (Wikipedia) It is thought that the major contributor to this bubble was the subprime lending market. According to the financial dictionary, subprime lending occurs when lenders make loans to borrowers who would not ordinarily qualify for credit if customary underwriting practices were to apply. These loans tend to carry higher interest rates than those offered to creditworthy clients. These loans also sometimes assess additional fees such as pre-payment penalties. (The Financial Dictionary) According to the Housing and Urban......

Words: 987 - Pages: 4

Free Essay

Dot Com Bubble

...Dot.com Bubble Christopher Smirnes Professor: Dr. D The Dot.com bubble, otherwise known as the Dot.com boom was one of the most significant events in the Internets history. It brought upon millions upon millions of dollars in losses and many of these start up companies never even made a profit. The business world was flipped upside down, and a whole new world was opening up to entrepreneurs. However, since this was such a new technology, as with anything new, there are always risks. The dot.com bubble can be broken down into three different stages, the investment stage, the failure stage, and the recover stage. It all started in the early 1990’s when the Internet truly got its start. During this time period, everything was very slow and many people did not buy computers due to the extremely high cost. By the mid 90’s everything changed, and the world was going nuts over the possibilities of the Internet. Businesses and investors were part of that group that jumped right on in. With the ability to reach millions of customers with click of a button, the Internet certainly has a huge draw. Everyone was trying to get into the game and investors were dumping tons of money into all of these companies that had to essentially start from scratch. It was during this influx of cash pouring in that everything seemed perfect and profits would just go through the roof. It seemed as if everyone had a domain name and being able to......

Words: 899 - Pages: 4

Premium Essay

Brand Bubble

...nd bubbleWall Street values brands higher than Main Street. Watch out. B 6 Spring 2009 BuBBle John Gerzema “Time destroys the speculation of men, but it confirms nature.” —Cicero, 106-143 B.C. As we leave behind 2008, the numbers are both historic and dismal. The S&P 500 declined by 38 percent, and almost 2 million jobs were lost. The median home price fell by 22 percent, while almost 7 trillion dollars in market value evaporated from the Dow Jones 5000 Index. Taxpayers funded $700 billion to bail out financial institutions, with another $17.5 billion to keep General Motors and Chrysler operating into the new year. The credit crisis intertwined virtually every economy and sector in the world, shattering consumer confidence to its lowest point in decades. The market bubbles in the S&L crisis of the 1980s, the dot-coms of the early 2000s and the home equity markets of today all exemplify the regular and recurring danger of rampant speculation, when unfettered zeal bids prices up to levels that far exceed the real value of the assets they represent. Yet bubbles are, as Shirley Bassey sings, “Just another case of history repeating.” Tulipmania. One of the first bubbles on record occurred some 400 years ago, in Holland. And the asset that perpetrated this bubble was a tulip bulb. The Dutch aristocracy had acquired a particular fondness for a type of tulip from Turkey that grew very well in the fertile lowlands of Holland. Citizens from all walks of life, from......

Words: 3845 - Pages: 16

Premium Essay

The Internet Bubble Burst

...The Internet Bubble Burst Sandra D’Adamo Intro to E-Commerce March 27, 2014 Professor MacKenzie Table of Contents Introduction………………………………………………………………………………..3 How the World Wide Web Began………………………………………………………….4 Tim Berners Lee……………………………………………………………………………4 How the Bubble Inflated…………………………………………………………………..5 How the Bubble Popped…………………………………………………………………..6 What Lessons were Learned……………………………………………………………….7 Could it have been Stopped………………………………………………………………… Introduction The internet bubble history started in 1993 with the public being able to access the World Wide Web. The WWW was inflated with the overpriced investment returns from 1994 through 2000. The bubble of the WWW busted wide open in 2001. At that time the Nasdaq was often quoted as a big indicator of the bubble. During that time the Nasdaq rose from around $750 dollars to approximately $5130 dollars. That was and incredible increase of about 682% from January 1995 continuing through March 2000. During this time the industry was focusing primarily on computer software. They focused on this due to the high profit margin for the software. In this paper I will explore the many avenues of how the WWW was created and the rise and fall of the internet creation. Figure [ 1 ] flatworldbusiness.worldpr How the World Wide Web Industry Began In the beginning ideas for the WWW go back as far as 1946. A gentleman named Murray Leinster wrote a story that talked about Logics also known as......

Words: 1463 - Pages: 6

Premium Essay

Nasdaq Bubble

...THE NASDAQ BUBBLE OF 1999-2000 The Nasdaq index was first compiled in 1971; before then, there was no formal measure of growth stocks, although some economists used the Wiesenberger growth funds as a proxy index. Yet while there were some excesses in growth stocks, their rise and fall had not been much different from the S&P 500 index, as shown in the figure 17.12 until the 1999-2000 period, when the Nasdaq index rose so much that many growth stock valuations really did take on tulip bulb characteristics. The foundation for the high-tech bubble was laid in late 1995, when Netscape went public, raising approximately $ 2 billion in its IPO and making Jim Clark the first internet billionaire. Not only was that figure dramatic, the offering broke new ground in the sense that Netscape had no earnings. In the past, P/E ratios for new companies may have been unrealistically high, but at least earnings existed. Netscape was selling only promises. Optimists pointed out at the time that Netscape had 85% of he browser market, apparently ignoring the fact that (a) they were giving the software away free and hoping to recoup by selling servers, and (b) Microsoft would not stand idly by and fail to compete. Netscape continued to bleed red ink and eventually was purchased by AOL. By the time of the Netscape IPO, almost every investor was familiar with the Microsoft saga, which by then had already risen from a split-adjusted price of $ 0.20 at its IPO to $ 15 per share – a 300......

Words: 846 - Pages: 4

Free Essay

History of the Internet: Dot Com Bubble

...dot-com bubble that occured in the 1990's through the early 2000's was said to have left some major negative impressions on the world of the internet and our economy, but that is not necessarily true. Because of the dot-com bubble, there have been many great outcomes that often goes unnoticed before looking past all of the businesses and internet companies that went under when this bubble finally burst in the early 2000's. In fact, many say that the dot-com bubble and burst was actually a needed cause and effect that has shaped the internet into what it now is today. Many people believe that a lot of the websites that existed during the dot-com bubble would have had some sort of success if it wasn't for the network infrastructure at the time. The thing is, not many people didn't have access to broadband and the websites weren't getting the exposure and full potential that it could have received. This is especially true for some websites, such as Broadcast.com (Altucher Confidential, 2011). This very same thought occurred during the dot-com bubble and computer scientists and engineers realized that there was a very much needed improvement to the infrastructure of the internet. In order to correct this, many businesses in the tech industry began using tax money to lay high-speed fiber optic cables so that the internet would be more accessible in certain cities and states. This is probably one of the most beneficial things that came about from the dot-com bubble......

Words: 917 - Pages: 4

Free Essay

The College Bubble

...In Megan McArdle’s article, “The College Bubble,” McArdle thoroughly argues that the government, and parents should be rethinking about how we invest in higher education. She focuses on the fact that 18-year olds often don’t look quite so hard at the education that they are getting. She writes, “For many students, college is less about providing an education than a credential.” For some people, a certificate testifying that they are smart is all they need. She also talks about how many students take the easy way out and cheat. Since the credential matters more to them than the education, “they look for ways to get the credential as painlessly as possible.” These students do not care and must have no motivation or passion. Once these uninterested students get their credentials, they don’t add meaning to their major in the real world. Many people also wonder where all the money that they pay is going. McArdle discusses how in addition to paying the faculty a majority of the tuition goes into amenities which include high speed Internet, well-upholstered classrooms, world-class fitness facilities and this is all in order to stay competitive with other colleges around the world. This article did a really good job arguing both sides of the issue of why we spend so much on college and is it really worth it. McArdle used many quotes from very knowledgeable people and also used statsitics to try to get her point across in the article. In the article, she quotes James Heckman, the......

Words: 318 - Pages: 2

Premium Essay

Internet Bubble

...Internet Bubble Table of Contents 1. The Beginning 2. World Wide Web and Internet-Not The Same Thing 3. Rise of the World Wide Web 4. Fall of The World Wide Web 5. Conclusion The Beginning The World Wide Web was officially introduced to the world on August 6, 1991 by Sir Tim Berners-Lee. The World Wide Web refers to a system of resources that will facilitate individuals using computer to view and interact with different type of information. The concept of the World Wide Web is to combine the methods of computer networking into a dominant and easy to utilize worldwide information system. Tim Berners-Lee formally introduced his project to the world on the hypertext newsgroup. In his own words from a post he said “aims to allow links to be made to any information anywhere”. It linked between different documents using the hypertext method. He made available all of the files necessary for people to replicate his invention. Although invented many years earlier Mr. Berners-Lee’s invention married hypertext with the internet. World Wide Web and Internet-Not The Same Thing The World Wide Web and the Internet are terms that to most people mean the same thing. While they’re related, their definitions are different. The Internet is the structure on which the World Wide Web is based which is at its most basic definition an electronic communications network. The World Wide Web is a part of the Internet “designed to allow easier navigation through the...

Words: 956 - Pages: 4

Premium Essay

The Dotcom Bubble

...The Dotcom Bubble Joanna Olmeda Mini Research Paper Fundamentals of E-Commerce INDEX Introduction Page 3 World Wide Web Page 3 Dotcom Bubble Page 4 Dotcom Bubble Pops Page 6 Conclusion Page 7 References Page 9 Introduction The World Wide Web was created by Tim Berners-Lee from an idea that he had in 1989 while working at European Particle Physics Laboratory in Geneva, Switzerland. Throughout 1991 and 1993 Berners-Lee continued to work on the concept and designed the Web during which time he took the feedback of what he was doing and continued to perfect it in a sense using specifications of things such as URLS, HTTP and the HTML coding and just like that the World Wide Web was born. World Wide Web It took a while to get the process rolling by 1991 it brought the availability or the browser and the web surfer software which was barely existent before then. It was mainly a screen in which you just imputed information, there was not variety it was pretty much a blank screen and one size font to put in the information one needed at the time. By 1992 there were a few sites that existed such as the CERN website, ACME Laboratories and even colleges had websites like the University of Illinois and Ohio State University. By the end of 1992 there were just about 26 websites total. Once 1993 hit the World Wide Web was beginning to become a bit more talked about and that is when the directors of CERN made a big impact. On......

Words: 1764 - Pages: 8

Free Essay

Bubbles

...Bubble," Mariana Zanetti, an MBA graduate of IE Business School in Spain, argues that getting an MBA is a waste of time and money. The following has been excerpted from the book with her permission. The first thing I am going to say about wealth is that many authors who write about prosperity and wealth make it clear: A job will not make you rich. If you want to be wealthy, at some moment of your life, you will have to create a source of income other than your salary. This is an evident and crushing reality: If you sell your time to others, you will quickly reach a limit in your capacity to generate income. In his book "Rich Dad, Poor Dad," Robert Kiyosaki said that the rich do not work for money; they generate assets that work for them. If you want to learn how to work for money, go to school. If you want to learn how to work even harder, you should get an MBA. OK, some top managers earn millions (and they are therefore millionaires). Some people still think they can get to those positions with an MBA — as if the Businessweek study, which found an MBA does not have a causal relationship with professional success, was not convincing enough. Do you want some more proof that an MBA will not get you there? If you look at the degrees of CEOs of the CAC 40 (the main stock exchange index in France), you will see that the MBA is nothing but an "optional" degree. In some companies, it is still desirable to climb the corporate ladder. These companies represent a very low......

Words: 528 - Pages: 3

Premium Essay

Filter Bubbles

...When referring to filter bubbles I had thought it would be some sort of tool that you, as an individual, would have control over. Some tool that would allow you to filter what you would like to see, and what you would not like to see as you search through sites on the web. However, filter bubbles is something that you do not have any control over. A filter bubble is a tool that each browser, either it be Facebook, Netflix, or even Google, will filter out things you typically do not browse through. It controls what you can and cannot see based on what each browser is seeing you watching or looking for. Pariser said “There is no standard Google anymore.”, and that was where he drew me. It allowed me to see how different the internet is becoming. There are so many risks when it comes to the internet, and you hear that daily. This is moving us to a world where technology is basically controlling our lives, and it's not challenging us. This tool is letting us be comfortable with what we are used to, and we don't get to decide what we want to see or not see because of these filters.. I actually did not even realize the severity of these filter bubbles. I did notice how I wasn't seeing more and more of these acquaintances I have via Facebook. I basically looked right past it, and thought that was just what Facebook did. I didn't realize how in-control these filter bubbles are becoming. Seeing Pariser compare his friends Google searches of the same search, and noticing the......

Words: 397 - Pages: 2

Premium Essay

Bubble History of Www.Com

...Web History Bubble History of the WWW ECOM 210 World Wide Web History Introduction Founded in 1989 the World Wide Web went from an impossible idea to a worldwide phenomenon that has fused itself into the needs of the people. I remember years ago when computers were just those gross green screened monitors that only allowed you to type a report. Now with the help of the internet our use of computer technology has reached amazing heights. We can reach people around the world with just a click of a mouse. “The web has changed the world. It has arguably become the most powerful communication medium the world has ever known” (webfoundation.org). Reading the webs history helps me to really see how the development of this great tool has geared us to an era of becoming completely technically inclined. The web is available everywhere you go from restaurants to coffee shops also with it being a feature on your mobile device it never leaves the side of the consumer. Internet access has become just as much of a need as toilet paper. In most cases jobs, schools and so on has built there curriculum and foundation around it. Without the web we would not have achieved the ability to have direct access to our bank accounts via applications or to send an email picture of friends and family to others around the globe. Although I grew up in the early 80’s at the peak of technology before the internet even existed I now cannot imagine a world without it. “The Internet is here to......

Words: 1744 - Pages: 7

Free Essay

Bubbles

...Bubbles I don’t remember where the camp name Bubbles came from. I do know that my daughter, Tarah, couldn’t have picked a better name for herself. Camp names are a tradition with the “teens” at Girl Scout camp. “Teens” are girls that are in at least the “6th” grade and are essentially in charge of camp. Bubbles fits Tarah’s personality perfectly, she’s vivacious and cheerful- but not in an obnoxious Richard Simmons type of way. She’s always tends to have an optimistic outlook on life. Although her physical characteristics were the complete opposite when she was a baby, chubby and bald, her attitude was the same, content and always smiling. I even brought her to the doctor afraid something was wrong with her because she cried so little. She started talking around the time she was two and hasn’t stopped since. We lovingly tease her because she even talks in her sleep. As a toddler there were never any tantrums. There was typical toddler mischief, but she was always smiling and giggling while causing havoc. Around the time she was five we had problems with telemarketers calling constantly. I would hand her the phone and supervise what was being said. She would ask if they had pets or kids, about the weather, and other random things until they eventually hung up. After a while the calls stopped. Once she was in school most elementary progress and report cards said something along the lines of “Tarah is a pleasure to have in class, but please work on the excessive......

Words: 904 - Pages: 4